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Buyers Beware: A “Free Look” Could Cost You

by John Kuhl & Michael Pak

Although the turbulence in the financial markets has contributed to a sharp decline in real estate transactions, many commentators are predicting future opportunities to acquire properties at discounted prices. No one can predict with certainty when the current downswing will end, or when and how quickly values will once again begin to appreciate. While it may seem premature to talk about an upturn, when the time comes, buyers seeking to take advantage of the opportunities should learn from the past and guard against sellers who may be tempted to back out of purchase and sale agreements (PSA) in order to take advantage of appreciating values.

The vast majority of reputable sellers can be counted on to stand by their commitments to sell, if for no other reason than it would be difficult to continue to do business if they gained a reputation to the contrary. Nevertheless, if values are appreciating rapidly, the temptation can be great for the seller to try to find a way out